Tuesday, January 28, 2014
2013 – The Year Private Equity Made a Comeback
The Private Equity (PE) industry returned almost $61 billion to investors over the first half of 2013, according to reports collected by Cambridge Associates, and looks set to return roughly $120 billion for the full year. This makes 2013 a very good year for the industry, considering it returned only $115 billion in 2012.
According to data provided by S&P’s Capital IQ, PEs sold more bonds in 2013 than in the preceding year. The value of debts issued by PE firms in 2013 was $2 billion higher than the $66.2 billion raised in 2012, and the capital raised was used to return money to investors and pay partners. That strategy is expected to pay off as long-term interest rates rise through 2014, following the Fed’s decision in December 2013 to taper its aggressive $85-billion-a-month bond-buying program.
Buyouts led by PE firms also reached their highest levels since 2007, with deals worth $233 billion announced in 2013 even as the stock market touched all-time highs. PE firms increased their holdings by 20% year-over-year (YoY).
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